Your HR and Payroll compliance and policy solution! Comply with federal, state, and international laws, find answers to your most challenging questions, get timely updates with email alerts, and more with our suite of products.

Costco, headquartered in Issaquah, Washington, operates more than 350 warehouse-style retail stores. Each warehouse is run by a general manager (GM), two to three assistant general managers (AGM), and three to four senior staff managers. GMs are paid roughly $116,000 a year while AGMs earn approximately $73,000. Costco hires its GMs and AGMs almost entirely from within the company but has no written policy or guidelines setting out the criteria for promotion eligibility. While it does generate a list of "promotable" candidates, employees are not always told of the existence of the lists and Costco does not mandate that more than one candidate be considered for any specific opening or that performance reviews be considered before a candidate is promoted. Costco also does not retain records from its selection process. In August 2004, Shirley "Rae" Ellis filed a Title VII suit against Costco in California federal court, alleging that only one in six of the company's GMs and AGMs were women and that promotion decisions at Costco were based on the discriminatory attitudes of its CEO and upper management. Ellis had joined the company in 1998 as an AGM after working as a Sam's Club general manager. She informed the company that she was willing to relocate for a GM position and she also wrote to her supervisors expressing a "burning desire" to advance in the company and asking what she could to do to be promoted to a GM. Despite her efforts, Costco did not promote her. She also did not learn of GM openings until after the positions were filled.

Class Certification

Ellis sought injunctive relief, lost pay, and compensatory and punitive damages on behalf of a nationwide class of current and former female Costco employees who had been employed as an AGM or senior staff manager. She moved for certification under Rule 23(b)(2) and 23(b)(3), submitting employee declarations and expert testimony to show that women at Costco were promoted at slower rates and their male peers fill most of the AGM and GM positions, that they were underrepresented in managerial positions compared to female employees at comparable companies, and that Costco's corporate culture was pervaded by gender stereotyping and paternalism. In opposition to class certification, Costco offered the expert testimony of a statistician and labor economist, who posited that any gender discrepancies at the company, if they existed, were limited to two regions. Costco also submitted expert evidence to show that any possible gender disparities could be due to non-discriminatory factors such as women's lack of interest in jobs with early morning hours because of family responsibilities.

Commonality Requirement

In January 2007, the district court certified an injunctive relief class under Rule 23(b)(2) but did not rule on the propriety of 23(b)(3) certification. Costco appealed the ruling to the Ninth Circuit. Before the appeal was decided, the U.S. Supreme Court issued Wal-Mart, ruling that approximately 1.5 million current and former female Wal-Mart employees who were allegedly the victims of sex discrimination could not proceed as a class. The justices unanimously held that the Title VII suit should not have been certified under Federal Rule of Civil Procedure 23(b)(2)'s injunctive relief provision and a five-justice majority ruled that the employees also failed to meet Rule 23(a)(2)'s commonality requirement. Reviewing Costco's appeal, the Ninth Circuit faulted the district court for not resolving a key issue with respect to the commonality requirement, namely whether the alleged gender disparity only existed in the two regions, as asserted by Costco, or was company-wide. Citing Wal-Mart, the Court stated "it is not correct to say a district court may consider the merits to the extent that they overlap with class certification issues; rather, a district court must consider the merits if they overlap with the Rule 23(a) requirements." (Emphasis in original.) It added that "if there is no evidence that the entire [nationwide] class was subject to the same allegedly discriminatory practice, there is no question common to the class." Concluding that district court failed to conduct a "rigorous analysis" of the commonality requirement as required under Wal-Mart and resolve whether gender disparity pervades the company, the Court instructed the district court to conduct new Rule 23(a) determinations. It stated that "[i]f, as Plaintiffs allege, promotion decisions are based on the biased attitudes of the CEO and upper management, one would expect disparities in all, or at least most, regions."

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)